News from EPI › 18 states have already passed laws designed to relieve corporate franchisers of their responsibility to pay workers fairly

In a new fact sheet, EPI Associate Labor Counsel Marni von Wilpert chronicles the growing trend of state passed joint-employer shield laws. These laws are designed by corporate lobbyists to protect corporate franchisers from bearing any joint responsibility with their franchisees for state labor and employment law violations. Eighteen states have passed these laws so far—ten of them in 2017.

When two or more businesses co-determine or share control over a worker’s pay, schedule, or job duties, then both of those businesses should be considered employers of that worker, or “joint employers,” and thus both are accountable for complying with employment and labor laws that protect employees’ basic rights on the job.

The fact sheet points to a 2016 case in New York, for example, where the state attorney general’s investigation revealed $565,000 in wages had been stolen from the workers who cooked and delivered Domino’s pizza. Because the Domino’s corporation allegedly played a role in hiring and firing the franchisees’ workers and required franchisees to use a payroll software system that Domino’s knew for years under-calculated gross wages, the attorney general filed suit against both Domino’s and the offending franchisees as joint employers, holding them both liable for paying the workers back wages.

Many of the joint-employer shield laws proliferating in the states are intended specifically to shield corporate franchisers such as Subway, McDonald’s, or Marriott from being held jointly responsible for the wage and hour violations of their franchisees—no matter the circumstance, including if the franchisor is complicit in or encourages the violation.

“This is a blatant attempt by corporations to get out of their responsibility for paying workers basic wages,” said von Wilpert. “This raft of joint-employer shield laws is part of a national trend of businesses hiding behind a fissuring workplace and shedding their responsibilities to employees. The lobby efforts of powerful corporations result in workers being less empowered, unable to seek recourse from a business that has control over their wages, hours, and working conditions.”

In addition to the 18 states that have enacted laws shielding corporate franchisers from their responsibilities as joint employers, there are current battles going on in Virginia, Missouri, and other states.

Von Wilpert notes that joint employer shield laws give big corporations an unfair advantage over small businesses because they insulate franchisers from sharing the risks of business. Holding franchisers accountable as joint employers with their franchisees will help ensure that good jobs are being created by the franchising model, and that their employees will be paid fairly for their work.

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.